Sharing Recreational Family Properties in Michigan
Michigan’s thousands of miles of Great Lakes shoreline and other natural assets have inspired family traditions relating to recreational properties that go back generations. From deer camps in the UP to family cottages along Lake Huron and Lake Michigan, passing this legacy along to a new generation of boaters, fishermen and nature lovers is an important estate planning goal for many clients.
Families can accomplish family ownership in a variety of different ways, and advice from a Michigan estate planning attorney can provide many insights about which ownership option best suits a particular property and the people who will share it.
- The most basic joint ownership option is the tenancy-in-common, which allows any co-owner to sell an undivided fractional interest or pass it on to chosen heirs. Tenancies-in-common are susceptible to partition actions and court-ordered sales, one reason why they can easily lead to conflicts.
- In a joint tenancy, each owner’s interest passes to the surviving owners upon death, but a sale or transfer of interest before death is still possible. Full rights of survivorship can also be designated that prevent sale without approval of all owners. All joint ownership options are further complicated by legal presumptions regarding marital property.
- Creating a trust that governs the use and administration of the property can provide peace of mind that the property will remain in the family. However, tax implications, the necessary powers of trustees and other complex factors must be considered.
- Using a traditional business entity ownership structure such as a Limited Liability Company (LLC) has become a very popular option. While LLCs may cost more to set up than other ownership options, flexibility of administration and the central ownership structure provide noteworthy advantages.
One of these options will likely make sense for most situations. A parent who wants to pass along the potential for the next generation to sell might be well served by designating a joint tenancy with full rights of survivorship. The trustees of a long-existing family trust may want to consider the advantages of an LLC over a trust set up by their parents or grandparents that will soon dissolve.
An estate planning lawyer can explain how various strategies might help a family share a recreational property harmoniously and securely and preserve it for future generations. If the family cottage or other property is already the subject of an estate administration or trust administration, a lawyer can explain the process and provide representation and guidance in order to help fulfill the deceased parent’s or grandparent’s wishes.